Embracing change: Access Bank and Backbase discuss the future of the industry in the fintech era
When the wave of fintech companies offering traditional banking services through software applications hit the financial services sector in Africa a few years ago, many banks were understandably alarmed. Fintech gained huge popularity by proving more flexible when it comes to anticipating and offering modern customers what they needed, according to Emmanuel Onyeje, the Nigeria regional manager of Backbase, a Dutch company that helps financial institutions deliver a successful digital transformation.
by Dulue Mbachu
Introduction
Globally, digital and mobile transactions have exploded within the last decade, with Apple Pay recently announcing transactions worth 6 trillion dollars in one year, more than Visa and MasterCard combined. Together with the success of Google Pay or local services like Mpesa in East Africa and Mo-Mo in Nigeria, mobile payments are becoming a staple of modern financial life.
Not to be outdone, many banks have moved quickly to cover lost ground by matching those services or collaborating with the fintech providers themselves to deliver new services. "One thing the fintechs achieved is that it made bank executives listen more to what their information technology departments had to say," recalled Lanre Bamisebi, the executive director in charge of digital transformation at Nigeria's Access Bank. Faced with digitalization, many African banks see the challenges they must confront as including a growing shortage of skills, the entrance of wireless telecoms into banking and payments, out- of- touch regulators, poor infrastructure, and the fintech revolution.
Backbase has found its niche within the technology gap that exists in the financial sector. Its work across Africa now involves helping banks fashion products and services that will keep them competitive against fintechs.
For instance, where a Ghanaian entity may want to tackle issues related to retail banking, a Nigerian counterpart may be seeking to deal with investment banking needs. And Backbase can address these differing needs.
Mathijs Ejipe, Regional Vice President, Backbase
Ongoing technological disruptions are allowing new opportunities to emerge across Africa, where digital payments systems are seen by some to be ahead of more developed countries. Recent continental developments, like the passing of AfCFTA, and the establishment of the Pan-African Payments and Settlements System (PAPSS) allow individuals and businesses across Africa to make payments to one another without non-African intermediaries.
That’s what the pan-African payments system allows you to do. It’s the first step to making sure that businesses can do even more business in Africa.
Emmanuel Onyeje, Nigeria Regional Manager, Backbase
In these circumstances, the banking sector in the continent is increasingly receptive to what companies like Backbase have to offer, according to Ejipe, who claims that banks are “open to work with somebody who has done it many times with a proven model."
African financial ecosystem player Access Corporation, which includes Access Bank, is among the lenders Backbase engaged in discussions, with plans to pursue a "digital-first" strategy for the next five years, according to Deputy Managing Director Victor Etuokwu. The plan is to sign up and manage all its new customers digitally, while not giving up its physical offices anytime soon to cater to the diverse needs of its customer base. Etuokwu hopes this strategy will further Access Bank’s international expansion ambitions:
We are not simply a Nigerian bank with Nigerian heritage, rather we are an African Bank rooted in Nigeria with a global outlook and vision. We have banking operations in about 14 countries in Africa, soon to be 20. We’ve been in the UK for the last 12 years and are the most successful African bank in the UK. We’ll soon be in Europe and maintain rep offices in China and India. So, we’re truly becoming a global bank with a proudly African Heritage.
Victor Etuokwu, Deputy Managing Director, Access Bank
Access Bank views the entry of fintechs as a collaborative opportunity, as it is a development that enhances the ecosystem and will provide customers with even more benefits, according to Etuokwu.
That leaves African financial services as a global leader in innovation that is finding new ways of doing old things or creating things altogether new. "So, in that respect, Africa is for innovation," said Ejipe, "and from the profitability standpoint, the banking sector itself here is a good place to be."
